F&N's Q3 profit jumps to S$1.3b on recognition of Vinamilk fair-value reserves
FRASER & Neave's (F&N) third-quarter net profit jumped to S$1.26 billion, or 87 Singapore cents per share, from a year-ago S$38 million after an exceptional gain of S$1.20 billion that resulted from the group's enlarged control of Vietnam Dairy Products Joint Stock Co (Vinamilk).
Excluding exceptional items, net profit for the three months ended June 30 would have risen by 59.9 per cent to S$60.7 million, or 4.2 Singapore cents per share, the beverage group announced on Tuesday after the market closed.
Nine-month profit climbed to S$1.29 billion from S$76.3 million with exceptional gain, but excluding exceptional items rose a more modest 15.8 per cent to S$87 million.
Revenue slipped 8.6 per cent to S$483.1 million in the third quarter with slower sales across all four business segments - beverages, dairies, printing and publishing, and others. Sales only outside of Singapore and Malaysia grew during the quarter.
But profit before tax and interest rose 33.2 per cent to S$78.2 million as F&N began to recognise Vinamilk's contributions on an equity accounting basis. F&N also recognised an exceptional S$1.20 billion gain from the recognition of Vinamilk's fair value reserves.
The new accounting treatment for Vinamilk followed F&N's steady increase in its Vinamilk stake, to 18.74 per cent now from 5.4 per cent in December 2016, as well as F&N taking a second seat on Vinamilk's board.
Looking ahead, F&N expects a subdued market for food and beverages, although Vietnam and Myanmar are seen as bright spots. The outlook for print and publishing is a "challenging" environment, and F&N said it will continue to "right size" its print capacity.
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